How Big Data is reducing costs and improving performance in the upstream industry

By Binu Mathew, Global Head of Development & Product Management, GE Oil & Gas Digital on 12/13/2016

Among the challenges that the oil and gas industry faces today, there is a bright spot of optimism in the form of Big Data. As oil and gas companies work to meet ever-increasing global demands for energy, major external challenges abound from the environment in which the upstream industry operates. Rising production costs challenge the bottom line, while fluctuating prices challenge the top line. Squeezing margins are prompting fresh thinking, which is increasingly reliant on the power of Big Data and analytics.

With challenge comes opportunity, and the challenges facing the industry today provide an opportunity for upstream operations to reshape the way they work. From the reservoir to the refinery, Big Data and analytics are helping companies to optimize their operations by both reducing operating costs and increasing productivity. A recent study by market research and analytics firm Kimberlite found that offshore oil and gas operators experience on average $49 million annually in financial impacts due to unplanned downtime. For the worst performers, the negative financial impact can be upwards of $88 million. The effective use of digital technologies in the oil and gas sector could reduce capital expenditures by up to 20% and cut upstream operating costs by 3-5%, according to recent report by consultancy group McKinsey. Even marginal gains at volume can have a transformative effect on operational financials. GE estimates that the industrial internet will bring productivity gains of $8.6 trillion for industrial companies in the next 10 years -- more than two times the future value of the consumer internet.

With the benefits of embracing Big Data becoming clearer, what can operators do to incorporate data solutions?

Retrofit Sensors

Retrofitting equipment with sensors can have a very quick payoff in terms of reducing maintenance costs and improving reliability. Today, only 3-5% of oil and gas equipment is connected. By retrofitting equipment, companies will be able to reduce the manual servicing and support for devices.

Connect to the Cloud

Currently, most data that is collected from upstream operations is used for issue detection and control, and not for optimizing the performance of the asset. For example, the average offshore rig has 30,000 sensors that generate data. Typically, less than 1% of this data is used to make decisions -- the data is stuck in ‘data graveyards’, where it lies dormant, unanalyzed and fails to drive insight for better decision making.

Software developed by GE is changing that. Asset Performance Management (APM) software powered by GE’s Predix is a suite of software that connects upstream assets to the digital world. The software was developed to capture, manage and use the data generated by sensors on rigs. By using sensors and connecting equipment to Predix, GE’s cloud-based data center, companies can use insights coming from their sensors not only to automate processes but to improve maintenance, reliability, and productivity.

Fewer than 24% of operators describe their maintenance approach as a predictive one based on data and analytics. Using Big Data, operators can proactively make better decisions. Machines and equipment can be monitored digitally, and analytics from the data generated can be used to predict and diagnose issues early. Operators can then implement analytics-based work management programs, using predictive maintenance to repair vital equipment before it breaks down, reducing downtime and increasing production. The Kimberlite study found that operators using a predictive, data-driven approach to maintenance experience 36% less unplanned downtime than those with a reactive approach. This resulted in, on average, $17 million dropping to the bottom line annually.

Start from the beginning

If digital solutions are incorporated into the build and design phase, new projects and facilities can begin optimizing their performance from day one.

Technology is speeding up, and by embedding digital solutions in the engineering, procurement and construction phases of a project, operations are designed for tomorrow, not for today. With digital at the core of major assets, Big Data can be used to build industry-wide solutions into the future of oil and gas.

The partnership between National Oilwell Varco and GE Oil & Gas is an example of how the upstream oil and gas industry is beginning to build data solutions into new projects.

The pioneering agreement announced this summer will see the two companies work together on delivering integrated solutions for Floating Production Storage and Offloading (FPSO) vessels. The engineering capabilities from two industry leaders will create a combined platform of digital solutions, optimizing performance by allowing information-sharing and predictive analytics through the life of the vessels.

This collaborative approach shows how companies are moving away from a “business-as-usual” approach and towards data-sharing solutions to benefit the whole industry. Greater openness, transparency and collaboration in digital solutions could deliver enormous benefit to the upstream industry.

The future of Big Data

Cost reduction is top-of-mind for the industry, but despite the downturn, companies are more likely to invest more, not less, in digital solutions. Digital technologies have a huge potential to transform upstream operations and create additional profits from existing capacity, making the industry more productive and more agile.

The global upstream oil and gas industry has the opportunity to capitalize on Big Data. Digitization has become not only a competitive differentiator but increasingly, a necessity to help operators make their businesses stronger long-term. The current constrained environment in the upstream industry provide a challenge to operators, but also an opportunity to embrace new technologies and decision-making processes, based on data, to improve performance and reduce cost.

Over the coming years the industry will be defined by those who took advantage of this digital revolution to evolve. Investing in digital solutions is key to deliver the large-scale efficiency and productivity improvements needed to weather the current industry turbulence and soar into a brighter future.

Related News ///

FROM THE ARCHIVE ///

Comments ///

Comments

{{ error }}
{{ comment.comment.Name }} • {{ comment.timeAgo }}
{{ comment.comment.Text }}